The European Central Bank

The European Central Bank (ECB) together with the
15 individual central banks of the European Union countries constitute
the European System of Central Banks. The ECB is headquartered in
Frankfurt am Main, Germany, and is chartered as follows:

The Executive Board: consisting of the president, the vice president
and four other members appointed by the head of state or government
of the 12 countries of the euro area.

The Governing Council: comprising six members of the Executive Board
and the 12 governors of the national central banks. The president
chairs both the Executive Board and the Governing Council.

The General Council: including the president and the vice president
of the ECB and all 15 governors of the European central banks.

The Evolution of the ECB and the Euro

1992—The Treaty on European Union is signed, establishing
the framework for economic and monetary union (EMU) in Europe.

1994—Establishment of the European Monetary Institute
(EMI) to strengthen central bank compatibility and monetary policy
coordination to prepare for the establishment of the European System
of Central Banks (ESCB).

1995—The European Council agrees on the name of the
European currency: the euro.

1996—Selected designs of the euro banknotes to go into
circulation Jan. 1, 2002, are presented by the EMI to the European
Council and the public.

1997—The Stability and Growth Pact is adopted by the
European Council to ensure budgetary discipline with respect to
EMU.

1998—The 11 original participating countries fulfill
the necessary conditions for the adoption of the single currency
as of Jan. 1, 1999. Conversion criteria are low inflation, sound
public finances, low interest rates and stable exchange rates, as
well as the political independence of their national central banks.
(Greece would join the Eurosystem in January 2001.)

—The governments of the 11 countries appoint the president,
vice president and other members of the Executive Board of the European
Central Bank. This marks the establishment of the ECB and the dissolution
of the EMI.

—All member countries fix their exchange rates and the conversion
methods. The ECB and the national central banks of the participating
member states constitute the Eurosystem.

1999—All restrictions on the movement of capital between
member states are abolished.

—The euro becomes the official currency in the participating
countries. All financial transactions are carried out in euro.

Jan. 1, 2002—The euro banknotes and coins circulate across all Euro-system members, and national currencies will no longer be tendered as of Feb. 28, 2002.

Fixed Exchange Rates of National Currencies*
to the Euro, 1998

Country

Currency

1 Euro =

Austria

Schilling

13.76

Belgium

Belgian Franc

40.34

Finland

Markka

5.95

France

French Franc

6.56

Germany

Mark

1.96

Greece

Drachma

340.75

Ireland

Punt

0.79

Italy

Lira

1936.27

Luxumbourg

Luxenbg. Franc

40.34

Netherlands

Guilder

2.20

Spain

Peseta

166.38

Portugal

Escudo

200.48

1 Euro= 89 U.S. cents (as of Oct. 25, 2001)

* Rounded to two decimal points.

Source: European Central Bank
(For more information on the European Central
Bank, go to www.ecb.int/.)